This study documents the magnitude of the gaps in education performance across public school students in Pennsylvania classified by race-ethnicity and socioeconomic status as measured by standardized achievement tests in eighth grade and high school graduation rates. The economic consequences of these gaps are quantified in terms of lost earnings for the low-performing groups and diminished economic output for the state.

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The Economic Impact of Achievement Gaps in Pennsylvania's Public Schools

by Lynn A. Karoly

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Research Questions

  1. How large are the gaps in education performance for Pennsylvania's public school students, as measured by achievement tests and high school graduation rates?
  2. What are the economic costs of the measured education performance gaps?

This study documents the magnitude of the gaps in student performance for public school students in Pennsylvania and estimates the economic consequences of those education performance gaps. Although Pennsylvania is one of the top-scoring states on the 2013 National Assessment of Educational Progress (NAEP) on average, the achievement gaps between students classified by race-ethnicity, economic status, and parent education are among the largest in the country. For eighth-grade reading and math, the share of white students in Pennsylvania achieving proficiency or above exceeds the share for African-American and Latino students by as much as 24 to 38 percentage points, depending on the assessment and subject. There are equally large differences in student achievement based on family economic status and parent education, as well as sizeable gaps in performance across school districts. If race-ethnic or socioeconomic achievement gaps were eliminated, average achievement scores for Pennsylvania would match Massachusetts' result (the top-scoring state on the NAEP) and likely place the state among the top-scoring countries internationally. The study applies several methods to value the cost of existing gaps in terms of current economic performance and to value the benefits that would accrue in the future from closing current gaps. Notably, race-ethnic academic achievement gaps amount to an estimated annual cost of $1 billion to $3 billion in lost earnings, which equates to 6 to 15 percent of the earnings for African-American and Latino workers. If student performance gaps based on race-ethnicity or family economic status were closed for future cohorts, each annual cohort in Pennsylvania would gain $3 billion to $5 billion in present-value lifetime compensation and nonmarket benefits. These social gains from closing race-ethnic gaps equate to approximately $83,000 to $125,000 in present-value dollars per African-American and Latino student.

Key Findings

Size of Academic Performance Gaps in Pennsylvania

  • There are sharp race-ethnic differences in Pennsylvania student achievement in eighth-grade reading and math: The share of white students achieving proficiency or above exceeds the share for African-American and Latino students by as much as 24 to 38 percentage points.
  • There are equally large differences in student achievement based on family economic status, with gaps in the proficiency rate of 20 to 26 percentage points between students classified as economically disadvantaged (about 40 percent of eighth graders statewide) and those that are not (the remaining 60 percent).
  • The gaps in the high school graduation rate among Pennsylvania students are sizeable as well, reaching 17 to 19 percentage points by race-ethnicity and 14 percentage points by family economic status.
  • There are also large differences in student achievement based on parent education and wide gaps in performance across school districts.
  • Although Pennsylvania is one of the top-scoring states on the 2013 National Assessment of Educational Progress (NAEP) on average, the achievement gaps between students classified by race-ethnicity, economic status, and parent education are among the largest in the country.
  • If race-ethnic or socioeconomic achievement gaps were eliminated, average achievement scores for Pennsylvania would match Massachusetts' result (the top-scoring state on the NAEP) and likely place the state among the top scoring-countries internationally.

Economic Impact of Academic Performance Gaps in Pennsylvania

  • When subgroups of students do not achieve their full potential in terms of cognitive skills or educational attainment, there is a loss in the aggregate skill or human capital of the workforce and a corresponding shortfall in gross domestic product (GDP). Economic models based on endogenous growth theory posit that skill upgrading will boost GDP growth, with gains that compound over time.
  • For the current workforce, race-ethnic academic achievement gaps amount to an estimated annual cost of $1 billion to $3 billion in lost earnings, which equates to 6 to 15 percent of the earnings for African-American and Latino workers.
  • If race-ethnic academic achievement gaps had been closed in 2003, the base year, Pennsylvania GDP would have been higher one year later by $1 billion to $2 billion, or 0.2 to 0.4 percent of actual GDP in that year. Ten years after the base year, with the compounded effect on GDP growth, GDP would have been higher in 2013 by $12 billion to $27 billion, or 2 to 4 percent of the value of economic output in that year.
  • If student performance gaps based on race-ethnicity or family economic status were closed for future cohorts, each annual cohort in Pennsylvania would gain $3 billion to $5 billion in present-value lifetime compensation and nonmarket benefits. These social gains from closing race-ethnic gaps equate to approximately $83,000 to $125,000 in present-value dollars per African-American and Latino student.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Student Performance in Pennsylvania: Levels and Trends

  • Chapter Three

    Academic Performance Gaps in Pennsylvania

  • Chapter Four

    Pennsylvania Student Performance in the National and International Context

  • Chapter Five

    Estimated Economic Impact of Academic Performance Gaps

  • Chapter Six

    Conclusions and Policy Implications

  • Appendix A

    Data Sources on Student Academic Performance

  • Appendix B

    Supplemental Tables

  • Appendix C

    Methods for Economic Analysis

This research was sponsored by Temple University's Center on Regional Politics and conducted in RAND Education.

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